Conflict mineral policy hurt miners – by Jonathan Cooper (Vancouver Sun – July 22, 2013)

http://www.vancouversun.com/index.html

‘Cure-all’ legislation that was meant to improve things, cost millions of jobs

Jonathan Cooper is vice-president of Macdonald Realty Group and has written this commentary as a concerned private citizen.

On July 1, 2010, the U.S. Congress passed the Dodd-Frank bill, a massive and complex piece of legislation which was designed to avoid a repeat of the 2008 housing bubble collapse and subsequent financial crisis. Buried in the bill’s 2,000-plus pages was Article 1502, the objective of which was considerably removed from the minutiae of credit-default swaps and mortgage finance.

Dodd-Frank Article 1502 (DF 1502) intended to prevent U.S. companies from being involved in the trade of “conflict minerals” in the Democratic Republic of Congo (DRC). As a result of strident lobbying by Hollywood celebrities and non-government agencies (NGO) like The Enough Project, Congress believed that eastern DRC’s immense mineral wealth was fuelling the civil war in that region, a war which has caused as many as five million deaths since its inception in 1998.

In the three years since its passage, DF 1502 has encouraged increased due diligence on the part of both multinationals and the DRC government. However, it has also become an object lesson in the unforeseen consequences of legislative intervention.

There is considerable evidence that, while well intended, DF 1502 has had the practical effect of putting millions of Congolese out of work, without at the same time measurably improving their security situation. To quote Prof. Laura Seay, an expert on the Congo, DF 1502 “has inadvertently and directly negatively affected up to five (million) to 12 million Congolese civilians. Many miners cannot feed their children. Their children are not in school this year because they cannot pay tuition fees. And those who are ill cannot afford medical treatment.”

In recognition of this, in May of 2013, Congress held a hearing to explore Dodd-Frank’s “unintended consequences” for DRC’s economy.

A breathtakingly beautiful region surrounding Africa’s “Great Lakes,” eastern Congo has been ravaged by an almost continuous multi-sided civil war for over 15 years. The origins and nature of the conflict are highly complex, and tied to ethnicity, the Rwandan genocide, mineral wealth, and a lack of a functioning government authority. The government army, para-governmental and “Mai-Mai” militias, Rwandan Hutu groups, the foreign armies of at least six countries, and various Congolese rebel factions have warred both over territory and over the region’s immense natural resource wealth (including gold, coltan, tin, and timber).

I had the chance to visit Goma, the largest urban centre in the region, in the fall of 2009. The scope and complexity of the conflict were reflected on the streets of this colourful, chaotic city: heavily armed soldiers from the United Nations and a wide array of DRC army and para-military groups were ubiquitous. The city’s roads, public health, and education infrastructures creak under the weight of a population that has rapidly doubled, as refugees seek to escape the almost-total lawlessness of more remote areas.

The civilian population has suffered the most from the conflict. Millions of refugees have been displaced, leading to a general economic collapse in east Congo. There have been recurring health crises, including a spike in HIV/AIDS and massive Cholera outbreaks which have killed tens of thousands. Most disturbingly, the civil war brought with it an epidemic of widespread sexual violence. The eastern DRC has been dubbed a “sexual holocaust” by many human rights organizations.

While certainly not the its sole cause, eastern DRC’s immense mineral wealth has exacerbated the conflict in the region. Various armed factions support themselves through trading conflict minerals.

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